As an industry, licensing has seen tremendous changes in recent years, with art licensing being no exception. One instigator has been the rise of the “discounter” as a market force, another the Internet. Together, these trends have permanently altered the licensing landscape of 10 years ago, with the final outcome still to be determined. But even at this early stage of change, some trends are clear.
Coinciding with this, the sheer number of artists who have “caught on” to licensing as a way to leverage their artwork has increased dramatically, influencing and by some measures saturating the industry, and challenging the individual would-be art licensor. Among those on the larger playing field, business-savvy and “brand-conscious” artists who can visualize a “total” program seem to have gained the upper hand in the licensing industry, versus those artists that focus only on production the art itself.
Back to topic, specialty and mid-tier retailers who once controlled a large share of the licensed art market are now vying with the “big-box” discounters, such as Walmart, Target and Costco for market share. Increasingly aware of the power of branding, the market share and “legitimacy” of these discounters has grown substantially within the retailing world, even as they have consolidated their position. More middle-class consumers now frequent their stores, putting even more pressure on the mid-tier competition and further narrowing the field into a fewer number of larger players.
How has this impacted the art licensing world? In one sense, it has made it more difficult for licensors to break into the field. There are more “gates” between potential licensors and the fewer number of retailers making decisions about what art to move forward with. Often the potential licensor is discouraged from contacting buyers directly, due to the sheer volume of reviews a buyer has to deal with.
On the other hand, this trend has broadened the field of potential application for licensed art products. Whereas before, art licensors may have targeted collectibles and high-end gifts, many new product categories have come into play including fabrics, housewares, tabletop, home décor and others. Mary Engelbreit is prime example of a licensor that has taken advantage of this trend, with designs extending into many different categories formerly unrecognized by licensors.
But the net effect has for the licensor been to increase the degree of sophistication involved in getting their art recognized and licensed. Many licensors find it advantageous to team with “licensee/manufacturer” hybrid companies, or representatives with manufacturing capabilities, that have ties to the major buyers in the industry. These “go-betweens” generally have more leverage with the retailers as well as mid-tiers, both through their manufacturing capabilities (they can easily churn out samples), and through their contacts in the field.
As a side note, we are seeing two additional trends to follow suit. One is for contracts between licensors and licensees to be non-exclusive. In effect this is a concession to the licensor, in recognition of the lesser degree of control over the ultimate placement of their artwork within this more vertical supply chain. In theory, this non-exclusivity gives licensors greater flexibility to put their artwork in front of more promising licensing leads.
The second trend we have seen is shorter-term licensing contract durations. This allows both parties, licensor and licensee, greater flexibility in a dynamic marketing environment. In practice, if the relationship between licensor and licensee remains intact at the end of the term, but hasn’t yet culminated in licensing deals, the contract can be easily extended via written notice.
In an upcoming article we’ll discuss another major trend that’s impacted the business side of art licensing –the Internet. In the meantime, email us with any comments or visit our Discussion Forum if you’d like to voice your licensing questions or share your experiences.
